What does Brexit mean for you & your property?

25.06.16

So, the “big day” has finally
come and gone, bringing months of campaigning to an end. The die has been cast
& the UK has voted to leave the European Union. So how will this affect UK
PLC and the London Housing Market?

Over the last 24hrs I have given
deep thought to the reality of Brexit and whilst it is widely accepted that we
are in unchartered territory, I have come to the opinion that things are not as
uncertain or as unpredictable as the market may perceive them to be.

Just a few of the EU trading
facts: In April 2016, the total trade
exports from the UK to the EU was £12bn, whilst the total trade imports from
the EU was £19.1bn, leaving a trade deficit of £7.1bn. The total trade between
the blocs for 2015 was over £352bn, this has increased from £319bn in 2008*. In
very simple terms then, it is in the interest of both trading partners to
ensure that they are able to continue to trade in the same open & free way
that they have been doing for the last 40 years. The EU as a whole (UK
Included) has been through a period of extreme volatility in monetary markets
since the crisis of 2008 and I suspect that there is very little risk appetite
for any further volatility on either side. As the dust settles on the decision to
leave, I anticipate a more coherent plan will emerge to stabilise markets and
ensure continuity.

Market Demand: Having traded through many changes in the market,
including the Financial crash of 2008, the Eurozone crisis, the Greek Debt
crisis, the slowdown in Asia, changes in Government across the continent and
stamp duty changes over the last 10 years, on almost every occasion one
investment has bucked the trend & has consistently outperformed the FTSE
All Share index – London’s Residential Property Market. With a chronic shortage
of housing stock within the Capital not seen since the post-war era,
developable land being at a shortage as well as a premium & domestic
population growth continuing on an upwardly trend, the issue of demand
outstripping supply is only set to become more acute.

Interest & Lending: David Tinsley, UK Economist at UBS has said that he
expects two interest rate cuts over the next 6 months and Mark Carney, Governor
of the Bank of England has seemingly endorsed that position by confirming that
he expected rates to remain low for some time. This will be a welcome boost for
first time buyers who will no doubt be looking to capitalise on exceptionally
cheap lending. HSBC have since launched a 5 year fixed rate at 1.95% and a 2
year fixed rate at 0.99%, the first of its kind in the UK. With rates set to
remain extremely low in the short to medium term, savers will be looking for
secure investments producing a solid return. A well placed property will see
between 4% - 6% return on investment, with very few of the market risks
associated with the financial markets.

Infrastructure Investment
& Regional Development: Being based
within a redevelopment area of London gives perspective to the transformative
effect of private investment & Govt infrastructure investment. With the
delivery of Crossrail due in 2018, the launch of the Asian Business Port, the
Redevelopment of Greenwich Peninsula, Reinvestment into Canary Wharf Group,
Westfield Stratford & the proposals over increased air capacity at London
City Airport, East & South-East London have been regularly reported as the
property hotspots of the Capital.

The combined effects of a severe
housing shortage, population growth, cheap lending, strong returns, urban and
structural infrastructure investment makes the housing market an attractive
proposition and a solid investment vehicle, relatively insulated from the
strong headwinds in the markets.

On Brexit, my overriding feeling
is that voters will be waking up in the days & weeks to come with a feeling
that despite the hype, or in some cases jubilation of where we have ended up,
in fact very little has changed and of course the world will go on as usual.

So, my advice is a nostalgic
return to 1939 and the famous poster that symbolises everything British &
that is to “Keep Calm & Carry On”